Feature
PRACTICE
Honing the tools With corporate vulnerability increasing, risk managers need to sharpen the focus of their work to target imminent threats, according to a recent IRM-sponsored report by the Cambridge Centre for Risk Studies BY SARA KAMIYA
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orporate vulnerability is increasing. Out of all the companies publicly listed in the US only 200 made a profit in 2015 – the remaining 3,281 made a loss (see Corporate vulnerability). Even so, the issue of managing a corporation’s collective risks is not often raised in the same discussion as maximising shareholder value. This vulnerability puts managing enterprise risk high on the corporate agenda. The top enterprise risks over the coming 12 months include financial, operational and regulatory risks (see Top 10 enterprise risks for coming 12 months), according to the study Risk management perspectives of global corporations. Yet for many corporations, such risk identification is an art form driven by intuition and gut-feel. How these risks are communicated is also eclectic and qualitative. Many risk management teams contribute to risk reporting through outlets such as the UK longer term viability statements and the US 10-K filings. Corporations often create internal risk registers and use them to help provide structure across disparate divisions of their company. Although risk registers can provide a holistic sense of risks, their qualitative nature can be a limitation without a process for comparing and prioritising risks.
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For many corporations, risk identification is an art form driven by intuition and gut-feel
Enterprise Risk
